Real Estate Investor · Washington D.C. · Member since 2010 · 74 posts · 17 votes
Good Afternoon Everyone,
I recently tried to submit an offer on an Orlando foreclosure. My offer was $50K and the listing price was $75K. It had been on the market for 65 days. It needed work and it was at market value. My realtor said the price was too low and she wouldnt submit the contract. She said bank properties sell for listing price but moreso between 5-10% higher. Is this true? Or did she not want to take the commission cut?
I am fairly new in the game learning on my own by reading books from the libraries and this site. I dont have a mentor even though I wish I did and I have gone through so many real estate agents because they are either too busy or unprofessional. Most dont return my calls and emails for at least 72 hours.
So at this point I dont know what to do and I am at the point of just giving up the entire real estate thing. The one I have now I believe is lying to me. What do you all think?
Residential Real Estate Agent · Chandler, AZ · Member since 2009 · 1k+ posts · 928 votes
16y
You do not need an agent to do anything. You can get copies of your state approved RE contract off the realtor's website for your state. Before you make the offer, call up the listing agent, and have them send you all the addendum's for the house. Realtor's tell you what they know, not necessary what you NEED to know.
Real Estate Investor · Washington D.C. · Member since 2010 · 74 posts · 17 votes
16y
Originally posted by Doug Haisten:
So Jon, ,with you making so many offers, you must spread these over a large number of listing agents. How do you get the LAs to submit that many offers that don't get accepted? I have trouble with agents not wanting to take my offer because "they know the bank won't accept it unless it is closer to list price".
This was my reason for starting this thread. My point exactly....What I found out was that they do not want to take the pay cut (in my case). Not because the bank want close to asking. Grant it, perhaps in other markets the bank want close to list.
Mobile, AL · Member since 2010 · 238 posts · 44 votes
16y
In this thread and others I read of saying to make relationships and make offers on properties not on the MLS. I agree with that and I am working on making those relationships. However, as I drive through my "farm areas" I see many REOs that have been an REO for months. When I call the listing agent I get the I can't submit that becuase it is too low and the bank won't accept a number that low. Furthermore, one of the LA has said banks aren't going to consider the 65 - 75 % ARV or they won't acknowledege rehab costs. Essentially he said the offer needs to be close to market and the banks don't consider the rehab costs either. I think he is taking me for a ride. Can I by pass the LA somehow?
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
Originally posted by Lisa Monroe:
$150,000 is close to 50% ARV. Are investors typically paying around this or the home wasnt $315K to begin with? Just curious.
Let me be very clear as I have stated this many times before here on BP: People toss around % of ARV or % off market value and many toss around the 50% region. In CA, and most other states, that is complete BS, or more accurately, it DOES NOT INCLUDE THE REPAIR FACTOR.
As Justin also stated above, buying on % of ARV, you MUST also factor in the repairs in addition to acquisition costs!
Originally posted by Doug Haisten:
So Jon, ,with you making so many offers, you must spread these over a large number of listing agents. How do you get the LAs to submit that many offers that don't get accepted? I have trouble with agents not wanting to take my offer because "they know the bank won't accept it unless it is closer to list price".
I have also stated many times that the BEST way (in my experience and professional opinion) to get REO's contarcted, is to get them BEFORE the MLS which means you are not making 20+ offers every week and spreading those between multiple list agents. That is a lot of time, effort and paperwork if you ask me. I form real life relationships with the TOP REO Brokers, not just anyone with a listing, and thorugh those relationships formed, I am able to make offers that are equal to the banks BPO approval amount. In real life, banks will usually not accept anything below the initial BPO approved list price until it has been on the MLS for at least 30 days. In my area, once it is on the MLS you are now competing with EVERYBODY.
Skip that competition and form relationships. It does not happen over night, but is very, very effective. How do I know this? My closed transactions and paychecks that accompany them are the proof in the pudding. I spun my wheels many times before I figured this out.
Real Estate Investor · Los Angeles, CA · Member since 2008 · 148 posts · 22 votes
16y
Will,
I agree with your contention of not writing a bunch of offers. I prefer to ferret out the deals that make sense and call my investors when the numbers add up.
I have relationships with two brokers, so far, who give me access to their list weeks before the properties are scheduled for MLS. However, I find that they still have to "list" the properties -- per their bank directives -- even though I have a list of people who are able to take down the deals, immediately.
With that being said, how many brokers did you build relationships with before their trust in you compelled them to "work" your offers above everyone else?
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
Originally posted by Anthony E Russell:
With that being said, how many brokers did you build relationships with before their trust in you compelled them to "work" your offers above everyone else?
Hard to answer as I have many contacts, many of which were built over time. Others, I gained instant credability because I was able to proof up a track record (not something a newbie can offer of course), could talk the talk, and they new it instantly. That gave me instant credability and deals were given to me shortly there after.
Wholesaler · Santa Fe Springs, CA · Member since 2009 · 219 posts · 83 votes
16y
I recently was able to purchase a couple REO's, using a buyers agent. Although I fully agree with Will, in that the BEST way, is before MLS.
However, I have different criteria than many, I don't look at the % of ARV, doesn't matter.
I look at gross profits.
Example, (actually a real deal, I just did).
I saw a property pop up on the MLS, where it said all offers will be presented to bank after 7 days on market. That told me that the l/a would little or no impact on the offer, so I had a friend of mine submit the offer, as my buyers agent.
I valued the property at a fix up cost of $350k. It was in a good neighborhood, and knew that once fixed up, would sell quickly.
The list price was $229k. Sure, I could have been like most investors and offer list, or even 70% and offer $245k, but I knew it would go for that because it was a good property.
I offered $275k. I took the ARV, and subtracted out 75k, which included enough for my repair costs, future selling costs, cost of money (I borrowed the purchase amount, none of my own cash), and a commission for me.
That was my "highest and best", right off the bat.
Well, obviously, you know how the story ends, I ended up getting the property at $275k, with the top 1 of 8 all cash offers. There were also 82 (yes, eighty two) "regular" financing offers, the highest one exceeding $350k (the l/a told me after closing).
I ended up putting $15k in the property and sold (closed escrow) 7 weeks after I bought it.
I got EXTREMELY lucky and sold to a woman, who had just received a life insurance settlement, and bought the property with a 90% down payment, for $360k! I had my private lender, carry back the 10% (1st TD).
After all the dust settled, I was able to pocket about $30k (before Uncle Sam takes his cut).
I guess I say all this because I don't really think that the "70% of ARV" formula really applies here in So Cal. I am not sure about anywhere else.